Counterparties: Spanish bond yields relief

By Ben Walsh
April 19, 2012

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France, and more crucially Spain, sold a total of $17 billion in debt, with each country meeting its targeted amount today. The rate on the 10-year Spanish benchmark rose to 5.74 percent from 5.40 percent at its last auction in January.

Failure in either auction, or a crippling interest rate for Spanish debt, would have been disastrous. The successful government bond auction came in the wake of news that the ratio of non-performing loans is increasing.

In Washington, the IMF’s Christine Lagarde made comments indicating that all is not, in fact, well:

International Monetary Fund Managing Director Christine Lagarde said she expects more contributions after landing pledges of about $320 billion in her campaign for bigger reserves to combat threats to global growth.

“I look at this pot of money as an umbrella,” Lagarde said today on Bloomberg Television’s “InBusiness With Margaret Brennan” in Washington before meetings of the world’s finance chiefs. “There are clouds on the horizon.”

Europe avoided an immediate pitfall but still needs additional resources to stabilize itself. Lagarde and other European leaders once again walked the line between soothing global markets and spooking them. It’s a position they’ve been in before, and if they are right about needing a larger firewall, one they will be in again. – Ben Walsh

On to today’s links.

Inefficient Markets
The stock market is 19 times more volatile than economic fundamentals – GMO.com

Banks
Morgan Stanley reports strong revenues, but debt charge leads to loss – WSJ
Bank of America reports improved trading performance, but one-time charges hit profit – Bloomberg

EU Mess
Reading the IMF’s “World Economic Outlook” in Madrid – The Atlantic

New Normal
Our “risk on, risk off” markets have become dramatically more correlated – FT Alphaville
Visualizing risk: Can we do better than heat maps? – The Guardian
Convict labor is back in the US – Salon

Think of the Children
The housing market sets the value of good public schools at $205,000 – CNN Money

Robotic War
Killer drones: How America spies and fights in secret – Rolling Stone

Compelling
Marx: the first economist to really understand the business cycle – Brad DeLong

Somewhat Obvious
World Bank President Zoellick: Argentina’s move to seize control of oil company is “a mistake” – Reuters

Sad Trombone
“The 40 richest individuals on Earth lost a combined $6.2 billion yesterday” – Bloomberg

Housing
Study shows foreclosure affects children’s health, development and education – The Northwestern

Swan Songs
“It wasn’t supposed to end this way”: Joseph Ackermann’s lame-duck finale at Deutsche – WSJ

Good Luck With That
Greater coordination between monetary and fiscal policy is needed – Economonitor

Rent Seeking
NYC taxi owners fight new rules – NYT

 

4 comments

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Anybody else think that the reason the stock market is now nineteen times more volatile than economic fundamentals might have something to do with the rise in high-frequency trading?

After all, if you are only holding a trade for milliseconds, who cares what’s happening in the real world?

Posted by mfw13 | Report as abusive

Atom walks into a bar. Bartender says, “why so glum?”

Atom says, “some damn physicist stole one of my electrons.”

Bartender: Are you sure?

Atom: Of course I’m sure. I’m positive.

—————

Pop quiz. Which of the above stories made me think of this joke. No, it was not completely random.

Posted by Christofurio | Report as abusive

NYC taxi owners need to follow the example of the Wall Street mob and get one of their own in as Secty. of Transportation – then they wouldn’t have to worry about competitors poaching their turf.

Slim-Fast poster-boy Brad Delong needs to confine himself to the Berkeley campus, and should (along with other academics) be shot on sight if he ever again sets foot in DC.

BW needs to tell us who the hell bought those bonds at the auctions. Bet big money is was somebody being funded by free money from the ECB, IMF etc. Who else would be crazy enough to use his own money ….?

@Christo – well, gonna tell us the answer in this lifetime?

Posted by MrRFox | Report as abusive

Mr Fox,

It was, of course, the link to the story about Argentina’s theft of a controlling share of a formerly-privatized oil company.

Argentina is the darned physicist, and …

Never mind.

Tip your waitresses.

Posted by Christofurio | Report as abusive